Commerce Secretary Howard Lutnick announced a potential one-month delay in tariffs on goods from Mexico and Canada associated with the USMCA treaty. The delay, contingent on progress against fentanyl trafficking, highlights the administration’s shifting trade strategies causing market instability and uncertainty for businesses and consumers, prompting heightened caution in investment and hiring.
Commerce Secretary Howard Lutnick indicated that President Trump is set to announce a one-month delay on tariffs affecting nearly all goods from Mexico and Canada, which is associated with the USMCA free trade treaty. This decision marks a significant shift from the administration’s previous economic strategy that has disrupted markets, businesses, and consumer sentiment.
Lutnick revealed in a CNBC interview that the tariffs, which were recently imposed at a rate of 25%, will now be deferred until April 2. This postponement hinges on Mexico and Canada’s progress in addressing the fentanyl trafficking issue that the administration has termed an epidemic.
Initially, stock markets declined throughout the day but later reduced their losses following Lutnick’s announcement. The Dow fell by approximately 100 points (0.3%), while the S&P 500 dropped 0.6%, and the Nasdaq decreased by 0.7%. The uncertainties stemming from the administration’s trade policies have contributed to a decline in market performance since Trump’s presidency began.
Trump has acknowledged the negative implications of tariffs, which may drive up prices for consumers already grappling with inflation. During a recent speech, he urged patience from affected farmers, stating, “bear with me” amidst potential retaliatory tariffs.
The mixed messages regarding tariffs have caused confusion within Corporate America, creating uncertainty over investment choices and hiring decisions. Despite campaigning on aggressive tariffs, Trump initiated his presidency by ordering investigations into potential tariffs rather than enforcing them immediately.
Previous promised tariffs for China were implemented at a lower rate than expected. A noteworthy development was the alteration of the de minimis exclusion, which affects goods valued under $800, significantly altering tariff enforcement practices.
In a surprising turn, the U.S. Postal Service halted all package deliveries from China due to the new tariff rules, only to reinstate the de minimis exclusion temporarily as the Commerce Department sought clarity on enforcement policies.
Trump also proposed matching tariffs, referred to as reciprocal tariffs, on a range of goods, including autos, but provided limited details. Despite setting a date for implementation, specifics regarding the products and countries affected remain vague, leading to speculation on various sectors.
As discussions around steel and aluminum tariffs progress, these additional tariffs are not substantially higher than existing ones. Market response to previous tariffs has been negative, prompting quick responses from Trump, including the recent suspension of tariffs on auto imports from Mexico and Canada.
The latest developments suggest that all tariffs may be off for the time being, with a potential reassessment due by April 2.
The potential one-month delay in tariffs on goods from Mexico and Canada, as indicated by Commerce Secretary Howard Lutnick, represents a shift in the administration’s economic strategy, amidst growing market uncertainties. This delay hinges upon border security progress regarding fentanyl; however, it underscores the fragmented communication from the administration regarding trade policies. Market responses reflect heightened caution among investors, businesses, and consumers, pointing towards an ongoing complex trade environment.
Original Source: www.cnn.com
